The move shows Yahoo Inc. (NASDAQ:YHOO)’s desire to regain some of the market share it has lost to Google in the lucrative search market. According to research firm comScore, 67% of searches from desktop computers in the U.S. are currently made through Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG), compared to 20% for Microsoft Corporation (NASDAQ:MSFT) and 10% for Yahoo.
Deteriorating relationship with Google
Mozilla and Yahoo announced the 5-year deal on Wednesday, after years of rising tensions between Google and Mozilla due to the introduction of the Google Chrome browser in 2008, which undercut Firefox. Chrome now has a greater number of users than Firefox, but the Mozilla browser still counts on a loyal following which makes over 100 billion annual search requests worldwide.
The previous agreement between Google and Mozilla ends at the end of November. As well as switching to Yahoo in the U.S., Chinese Firefox users will default to the Baidu search engine, and Yandex will be used in Russia. Firefox users will still have the option to select Google as their default search engine.
Yahoo has a lot to prove after using Microsoft technology to provide search results for its website for the past 4 years. The financial details of the contract were not released but Mozilla chief executive Chris Beard wrote that the contract offered “strong, improved economic terms” and would allow Mozilla “to innovate and advance our mission in ways that best serve our users and the web.”
Google provided $274 million, or 90%, of Mozilla royalty revenue for 2012. Details for the past year have not yet been released.
Yahoo is currently designing what it calls a “clean and modern” search engine for Firefox which will be released next month. The new design will be implemented on its own website by early next year.
The new version will mainly affect the way in which search engine results are displayed, and not the way they are made. Microsoft will continue to provide search technology under the 10-year deal signed in 2009.
Yahoo CEO Marisa Mayer has come under increasing pressure from activist investors of late, and is presumably hoping this tie-up with Mozilla will calm them down. She called the deal “the most significant partnership for Yahoo in five years.”